Indirect Estimation and Deductibility of VAT: Legal Criteria and Fraud Prevention Measures

• The indirect estimation method can determine both accrued and deductible VAT amounts.
• Deductible VAT requires proof that the amounts were actually borne by the taxpayer.
• The deduction is conditioned on the VAT being effectively supported and normally passed on.
• The EU Court of Justice doctrine allows denial of VAT deduction if the taxpayer knew or should have known about participating in tax fraud.
• The tax administration must prove the taxpayer’s knowledge of potential fraud.
• VAT deduction can be denied if the invoice is from a non-existent operator or if the taxpayer lacks proper documentation.
• The Union law requires adequate documentation for VAT deduction.

Source: serviciostelematicosext.hacienda.gob.es

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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